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All leaseholders and
freeholders in The Paragon share the communal costs by
paying Service Charges.
An annual Budget is set
by the PMC. The total cost is then
divided up, or "allocated", according to the location of
the property and its square footage - recognising that
different parts of The Paragon have different and
specific costs, for example the seven-yearly "septennial"
decoration charges for the School-house building which
fall only on residents of the School-house whereas costs
relating to the external common parts and security gates
would fall upon all owners.
An application is issued
quarterly by the
Managing Agent, and residents/owners are required to
pay within one month of the date of issue.
Penalties for late
payment have been agreed by the PMC and will be levied
following ratification by the next General Meeting.
The square-footage used
is currently the 1997 initial square footage. The PMC
have recognised that many owners have increased their
square-footage in the meantime, whether by adding a
mezzanine or by excavation, and have agreed that the
units should be professionally measured every decade,
and adjustments made annually based on plans for any
developments made in interim years.
Quotes are currently being obtained for a 2008
re-measure which will then be used as the basis for the subsequent
financial year's allocation.
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2008-09 Service
Charge Report - April 2008
As Managing Agent, I issue a report each year on
the previous Service Charge year
and on the subsequent PMC budget for the coming
year. Because the PMC had
several months in which it was unable to take
decisions, discussions on the budget
2008-09 were not begun until March, hence this
report is being issued a little later
than normal
Please note that the Service Charge is made up
of the Operational Charge, the
Septennial Charge and the Capital Reserve Charge
Operational Charge
This is the charge for daily maintenance of the
Paragon estate. It is paid by all 47
property owners in varying proportions depending
on the type and size of the
property. Last year’s Operational Charge Budget
was estimated at just over £54,558.
At the end of the year (31 March 08), having
allowed the gate, access and
communal TV maintenance agreements to expire and
keeping other spending to a
minimum the final expenditure was £52,750 - a
under-budget sum of £1,808 has
therefore been fed back in to the 2008-09
budget. This is the fifth consecutive year
that expenditure has come in under budget
Unlike previous years where it has been
necessary to reduce costs generally in order
to balance a large increase in one or two
sectors, this year there are no items that are
forecast to rise sharply. The new Operational
Charge for 2008-09 therefore, based on
the new budget, will be £53,152, a 2.5%
increase.
The unknown item is legal fees. Following the
bad legal advice given last year, the
PMC are changing both the solicitor and the
method of fees. Instead of a fixed fee
retention they are to be charged per item of
work. The amount of legal work that will
be required is difficult to forecast and the
same, £3,600 figure has been left in the
budget
Septennial Charge
This charge, paid only by owners of units in the
School Building, is on a graduated
scale increasing each year until the work is
carried out in 2010. This year payments
by leaseholders will increase by 4%
Capital & Reserve Charge
This charge is collected against any capital
expenditure (including renewed fences,
car park improvements, collapsed drains, and any
unforeseen repairs etc) and is
collected proportionately from all owners. The
average increase this year is £34 per
unit.
Arrears
The PMC had been wrongly advised on the format
and procedure of EGMs. The
EGM in 2007 that agreed a change in the method
of collection of arrears, therefore,
has been nullified and for the past three
Quarters no arrears have been collected.
Arrears are building up again and a new policy
of charging for arrears will be
established by the PMC soon
Conclusion
This year, overall, Service Charges have risen
by an average of 4.75%, a little above
inflation. Five years ago the Paragon had no
Reserve Charge (there is now nearly
£20,000 in reserve), and there have been huge
increases in insurance, legal fees and
maintenance, yet in that time the overall
Service Charge has risen by around 9.3% -
well below inflation for the five years
The adequate Septennial & Reserve funds will
mean that owners will not again have
to top up their payments to cover one-off costs,
and will be a huge reassurance for
new buyers wanting to move into the Paragon
Thanks for your continued payments
Ian Sime (Managing Agent) |
The 2007-08
Service Charge Report is
here |